Know Your Lender Before Looking for a Home

Connecting with a mortgage lender is the first step 

Most people miss the first step before looking at homes and talking to a real estate agent. They fail to realize they need to connect with a mortgage lender beforehand to make the process streamlined as possible. Here are five things to consider before connecting with an agent. 

1. Setting realistic expectations 

Looking for homes that are out of your financial reach without knowing it can be discouraging. You will need to get a pre-approval letter. This proves to both the real estate agent and the seller exactly what you can afford. 

2. You can still shop around 

Just because you're pre-approved for a loan doesn't mean you have to stick with that lender. You can continue to apply for a loan from other lenders. Collect all offers on the same day since mortgage rates change every day. 

3. Entice the sellers' eyes 

Coming in with a pre-approved loan offer, whether you're talking to a real estate agent or a potential seller, proves that you're serious. You want to present yourself as hassle-free, especially in this competitive market. You aren't just looking, and a seller can trust that you can sign the check.

4. You'll be able to finish the paperwork earlier 

You will need a lot of paperwork to complete the loan. Tax returns, W-2's, pay stubs and bank statements to name a few. Starting the documentation collection process earlier will make it easier when it's time to finalize your loan. It also reduces the liklehood that the seller pulls out because of mortgage complications. 

5. Estimates closing costs

The first check you write is going to be for more than just your down payment. After you apply for a mortgage, the lender will give you an idea of how much origination, title and appraisal fees will cost. While the seller often pays at least some of the closing costs, your share might still be as much as 3 to 6% of the loan amount.